Earnings results often give us a good indication of what direction the company will take in the months ahead. With Q3 now behind us, let’s have a look at Paychex (NASDAQ:PAYX) and its peers.
HR software benefits from dual trends around costs savings and ease of use. First is the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. Second is the consumerization of business software, whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy to use platforms.
The 6 HR software stocks we track reported a decent Q3; on average, revenues beat analyst consensus estimates by 3.27%, while on average next quarter revenue guidance was 1.66% above consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows, but HR software stocks held their ground better than others, with the share prices up 6.33% since the previous earnings results, on average.
Paychex (NASDAQ:PAYX)
One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.
Paychex reported revenues of $1.19 billion, up 7.37% year on year, beating analyst expectations by 1.21%. It was a weaker quarter for the company, with slow revenue growth and a decline in gross margin.
John Gibson, President and Chief Executive Officer, commented, “We posted solid financial results for the second quarter, with growth of 7% in total revenue and 9% in diluted earnings per share, driven by our strong execution and comprehensive suite of solutions.”
![Paychex Total Revenue](https://news-assets.stockstory.org/chart-images/Paychex-Total-Revenue_2023-01-23-071419_mhom.png)
Paychex delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The stock is up 3.49% since the results and currently trades at $118.30.
Read our full report on Paychex here, it's free.
Best Q3: Paycor (NASDAQ:PYCR)
Found in 1990 in Cincinnati, Ohio Paycor (NASDAQ: PYCR), provides software for small businesses to manage their payroll and HR needs in one place.
Paycor reported revenues of $118.3 million, up 27.5% year on year, beating analyst expectations by 4.42%. Despite the stock dropping on the results, it was a very strong quarter for the company, with a full year guidance beating analysts' expectations.
![Paycor Total Revenue](https://news-assets.stockstory.org/chart-images/Paycor-Total-Revenue_2023-01-23-071424_bxmv.png)
Paycor pulled off the highest full year guidance raise among its peers. The stock is down 14.2% since the results and currently trades at $23.66.
Is now the time to buy Paycor? Access our full analysis of the earnings results here, it's free.
Ceridian (NYSE:CDAY)
Founded in 1992 as an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Ceridian (NYSE:CDAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.
Ceridian reported revenues of $315.6 million, up 22.7% year on year, beating analyst expectations by 3.28%. It was a weaker quarter for the company, with a decline in gross margin and underwhelming revenue guidance for the next quarter.
Ceridian had the weakest full year guidance update in the group. The company added 120 customers to a total of 5,848. The stock is up 12.7% since the results and currently trades at $69.75.
Read our full analysis of Ceridian's results here.
Asure Software (NASDAQ:ASUR)
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ:ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
Asure Software reported revenues of $21.9 million, up 21.8% year on year, beating analyst expectations by 3.25%. It was a solid quarter for the company, with a significant improvement in gross margin and revenue guidance for the next quarter above analysts' estimates.
The stock is up 49.6% since the results and currently trades at $9.80.
Read our full, actionable report on Asure Software here, it's free.
Paycom Software (NYSE:PAYC)
Founded in 1998 as one of the first online payroll companies. Today, Paycom (NYSE:PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Paycom Software reported revenues of $334.1 million, up 30.4% year on year, beating analyst expectations by 1.79%. It was a mixed quarter for the company, with very optimistic guidance for the next quarter but a decline in gross margin.
The stock is down 8.72% since the results and currently trades at $313.46.
Read our full, actionable report on Paycom Software here, it's free.
The author has no position in any of the stocks mentioned